More On Affordability

According to the National Association of Home Builders Housing Opportunity Index (HOI), historically low interest rates and relatively stable housing prices in the last quarter of 2012 helped with a “slight” gain in housing affordability nationally. The following data affirms an earlier blog on housing affordability from the National Association of Realtors® (NAR), and should be a further encouragement for potential homebuyers to make a purchase decision.

The HOI shows that from October through December of last year 74.9 percent of the homes sold were considered affordable to families earning the U.S. median income of $65,000. This was up slightly from the 74.1 percent affordability factor for median-income earners during the third quarter of 2012.

NAHB Chief Economist, David Crowe noted that the median price for all new and existing homes nationally for the fourth quarter was $188,000; this compares to a nearly identical median price of $189,000 for all homes during the preceding third quarter. He goes on to say, “It is noteworthy that affordability remains historically high thanks to favorable mortgage rates even as national home price indexes show some rise in values.”

Chairman of the NAHB, Rick Judson, also comments on the favorable data by saying, “The most recent housing affordability data should be encouraging to many prospective home buyers, because it shows that homeownership remains within reach of median-income consumers even as most local markets appear to be on a recovery path,”

Further data from the NAHB Improving Market Index reveals that 259 out of the 361 metropolitan housing markets are consider as “improving,” this includes markets found in all 50 states and the District of Columbia.

For the second straight quarter Ogden-Clearfield, Utah was noted as being the nations most affordable housing market, with 93.7 percent of all new and existing homes sold being considered affordable to median-income families. The median income for the area was $71,500. During the third quarter 93.3 percent of the homes sold were deemed affordable in this market.

California markets did not fair so well, with San Francisco-San Mateo-Redwood City listed as being the least affordable housing market nationally. The Improving Market Index shows that only 28.4 percent of homes sold in San Francisco during the fourth quarter were affordable to families earning that area’s median income of $103,000. Several other California housing markets were near the bottom of the list including local markets; Santa Ana-Anaheim-Irvine, Calif. and Los Angeles-Long Beach-Glendale, California.